Thursday, 27 November 2014

* First came food trucks, now fashion trucks are on the rise

The New York Times
Tamara Best
Most weekday mornings, Jessie Goldenberg can be found driving around the Flatiron district or Lower Manhattan searching for just the right parking space for her truck.

While there's no precise formula, Goldenberg said she has learned valuable lessons, including the importance of parking on a corner. "We cannot park in the middle of a block because our entrance is through the back," she said.

Goldenberg owns a mobile boutique, called Nomad, that sells clothing and accessories with what she described as a "wanderlust, bohemian vibe" from a truck. She said it cost her about $US70,000 ($81,810) to start the business - considerably less than the $US100,000-plus she thinks she would have had to spend to open a traditional storefront.

"I had very briefly considered opening a brick-and-mortar," Ms Goldenberg said. "But after working at a small boutique in Brooklyn and observing the overhead and seasonal cash flow, I knew it would be too much of a risk for me just starting out. Having the truck involved a lower total startup cost and felt a lot less risky."

Over the last 10 years, mobile businesses have been on the rise across America as the US economy faltered and aspiring entrepreneurs sought ways to operate businesses for less money.

Much of the rise can be traced to Roy Choi, a chef in Los Angeles who started selling Korean barbecue tacos from a truck in 2008. The popularity of Choi's tacos is largely credited with being the tipping point for urban food trucks and for spreading the movement around the country - and into countries as far away as Australia, where the first first truck, Cantina Mobil, started serving up Mexican food on the streets of Sydney in May 2012.

Matt Geller, a board member of the US National Food Truck Association, said that the way food trucks created a natural gathering place for people when clustered together helped demonstrate that mobile was a viable option for selling all kinds of merchandise: flowers, music, art and especially clothing.

Le Fashion Truck, the brainchild of Jeanine Romo and Stacey Steffe, hit the streets of Los Angeles in 2011 and is often credited with being the first successful mobile boutique there, selling local clothes and handmade jewelry. Its startup costs, according to the owners, were less than $US20,000.

It features young contemporary clothing with a California style, Steffe said, and she and Romo take their truck to events, private shopping parties and collaborative promotions like a monthly pop-up at the Los Angeles-Westwood W hotel, where guests are given promotional cards that include a small discount at the truck.

Mobile boutiques also have a growing presence in New York, Nashville, Houston and the Washington area, according to the American Mobile Retail Association.

Mobile boutiques
"The future of mobile retail is going to be very diverse," said Sarah Ellison Lewis, founder and chief creative officer of Bootleg Airstream, a mobile shoe store based in Austin, Texas, that carries shoes from around the world. "It's an amazing way to reach people in a memorable form, and it's a sustainable business model."

Lewis said she had lower overhead expenses than most traditional stores and reached $US100,000 in revenue in her first year.

Average startup costs for mobile boutiques, according to Steffe, who is a co-founder and president of the mobile retail association, generally run from $US20,000 to $US30,000, based on expenses for a used truck, interior and exterior upgrades and inventory. She said the average truck carries about $US2000 to $US3000 a month in overhead costs, including gas and insurance.

Romo of Le Fashion Truck, who also acts as a consultant for other mobile truck owners, said it takes mobile businesses one to two years, on average, to break even.

The success of mobile stores can produce a backlash from brick-and-mortar businesses that sometimes see mobile stores as competitors, which aren't necessarily required to comply with the same regulations traditional businesses face.

"When I started, we did get a little bit of tension from brick-and-mortar stores," said Abby Franklin, the owner of the Trunk boutique in Nashville, whose truck design is inspired by the old-fashioned wagon of a traveling medicine man. "The hardest part was educating the community that it was a local small business, not someone from out of town. My favorite piece of advice was, 'You are ahead of your time with the truck. Hold on and the rest of Nashville will catch up.'?"

While acknowledging the tension, Mike Gatti, senior vice president of member relations at the National Retail Federation, said brick-and-mortar owners can gain from the rise of mobile retail.

"It creates another competitor," he said, "but what we're seeing is that a lot of them are buying into it now because they are seeing a benefit. For example, a customer might buy something in a truck and then walk into a brick-and-mortar location and find something that complements the purchase. I wouldn't be surprised if the big brands start doing it themselves. Because it's a great way to bring what you've got in your store to a new neighbourhood to test it in a new market."

Winter snap
The cold winter weather in the US is another challenge for truck owners. Last year, Goldenberg closed her truck during the winter, which allowed her to focus on branding and to introduce in the spring an e-commerce site that broadened her consumer base beyond New York City.

"I instantly learned that I have overlooked how much work goes into setting up a functioning online store," she said, adding that while it was too early to gauge the online store's success, she was working on increasing its inventory and improving the site.

Regardless of the season, parking is always an issue. In Nashville, Franklin said she has had success in the small shopping district of Hillsboro Village near other boutiques, adding that owners have welcomed her truck.

"I don't really park anywhere you need to feed the meter," she said. "I try to park in a business parking lot or at an event. I will pay a fee to the business owners to park on their property."

The rules differ from city to city, and boutique owners are often subject to changing regulations, making it tricky for mobile businesses to move from one jurisdiction to another.

In California, a bill sponsored by Rob Bonta, a Democratic state assemblyman, that was intended to standardise the process for licensing mobile retailers across the state passed the legislature but was vetoed by Governor Jerry Brown. The mobile retail association, Steffe said, would like to see more statewide legislation across the country to simplify and standardise regulations.

Some owners, like Franklin, are finding a middle ground by having both a mobile truck and a brick-and-mortar store - even if, for some, the truck is more of a marketing tool than a big component of sales.

Of the two, Franklin said, the mobile boutique actually had higher startup costs, with the truck costing $US35,000 to get up and running in contrast to the $US10,000 she invested in a small retail location, which she is planning to expand. But she said the monthly costs of the shop are much greater than those of the truck. "Having them is like the best of both worlds. When the truck can't go out, we still have a way to sell stuff," she said.

She still considers the truck her main business, which she said earns almost double the profit of her brick-and-mortar store. In terms of revenue, she said, "We are on track to make between $US175,00 and $US200,000 between both."

Despite the challenges, Goldenberg said she simply enjoys life on the road. "I'm putting every dime possible back into the business," she said. "I took out loans and credit cards to get Nomad rolling, and while I'm still paying those off, I'm off to a pretty good start."

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